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Optimal Deterministic Mechanism Design: Type-Independent Preference Orderings

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  • Hitoshi Matsushima

    (University of Tokyo)

Abstract

We investigate revenue maximisation in general allocation problems with incomplete information, where we assume quasi-linearity, private values, independent type distributions and single-dimensionality of type spaces. We require a mechanism to be deterministic, strategy-proof and ex-post individually rational. We assume that each player has a type-independent preference ordering over deterministic allocations. We show that the Myerson’s technique to solve the incentive-constrained revenue maximisation problem in single-unit auctions can be applied to general allocation problems, where the incentive-constrained revenue maximisation problem can be reduced to the simple maximisation problem of the sum of players’ virtual valuations without imposing any incentive constraint.

Suggested Citation

  • Hitoshi Matsushima, 2018. "Optimal Deterministic Mechanism Design: Type-Independent Preference Orderings," The Japanese Economic Review, Springer, vol. 69(4), pages 363-373, December.
    • Handle: RePEc:spr:jecrev:v:69:y:2018:i:4:d:10.1111_jere.12176
    DOI: 10.1111/jere.12176
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    References listed on IDEAS

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    1. Mishra, Debasis & Sen, Arunava, 2012. "Robertsʼ Theorem with neutrality: A social welfare ordering approach," Games and Economic Behavior, Elsevier, vol. 75(1), pages 283-298.
    2. Benjamin Edelman & Michael Schwarz, 2010. "Optimal Auction Design and Equilibrium Selection in Sponsored Search Auctions," Harvard Business School Working Papers 10-054, Harvard Business School.
    3. Hitoshi Matsushima, 2012. "Optimal Multiunit Exchange Design," CARF F-Series CARF-F-279, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
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    8. Hitoshi Matsushima, 2012. "Optimal Multiunit Exchange Design with Single-Dimensionality," CARF F-Series CARF-F-292, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo, revised Sep 2012.
    9. Nicolás Figueroa & Vasiliki Skreta, 2011. "Optimal allocation mechanisms with single-dimensional private information," Review of Economic Design, Springer;Society for Economic Design, vol. 15(3), pages 213-243, September.
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    More about this item

    Keywords

    D44; D61; D82;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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